In fact, let’s discuss them first.
It’s without question HP and Cisco are the clear front-runners within segments such as routing and switching, but they are also well positioned for markets such as the cloud that is soon to emerge and dominate consumer and corporate enterprises. This makes the companies excellent buys.
It seems, however, that Wall Street wants to cast them by the wayside because “growth” is not something either offers in sufficient quantities at this stage of their maturation — even though Cisco continues to churn out one excellent quarter after another, while maintaining margins leading the industry by almost 50 percent.
HP recently reported better-than-expected earnings results (beating analysts’ estimates on top and bottom lines), prompting many naysayers to affirm that Meg Whitman was indeed the right person for the job.
The company has started to combine its PC and printing divisions and recently confirmed it will begin eliminating 27,000 jobs in a cost-saving measure of as much as $3 billion to $3.5 billion by 2014. So clearly it is committed not only to being more efficient, but returning value to shareholders. What’s more, HP will stand to benefit immensely by any success gained from another company I’m looking to add: Microsoft, which is due to release its Windows 8 operating system.
Windows 8 could add $8 to Microsoft’s share price, reigniting the magic of the PC era. As it stands, it supports the idea that Intel and Microsoft have become significantly discounted to their long-term potential. (Read More: Windows 8—Redmond, We Have a Problem.)
The two were joined at the hip at the height of the PC era. If not for Intel and its powerful processors, Windows would not have been the same dominant force. But we are in a new era, one in which mobile devices rule, led by Apple and Google. This has spurred the rise of Qualcomm, while Intel has been somewhat forgotten.
There is room for both.
As bullish as I am on Intel, Qualcomm presents value at current levels — particularly having fallen 20 percent due to less-than-stellar earnings — and continues to affirm why I think it has one of the best businesses operating in a fast-growing industry.
In its most recent conference call, it was clear management has a firm handle on what it needs to do to mitigate the supply chain issue scaring investors. I fully expect the concern to be resolved by at least the end of the third quarter.
There are myriad reasons why these companies get overlooked when discussing the best value plays on the market. Apple is trading well over $600 per share, with recent targets calling for $1,200, but many are quick to forget that five years ago the stock was just over $100 per share. Likewise, each of these companies has the potential to do something remarkable. All they need is a little more time.
Five years should be enough.
—By TheStreet.com Contributor Richard SaintvilusAdditional News: Intel Cuts Revenue Outlook on Softer Demand
Additional Views: Buy Cisco’s Dividend: Pro
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Disclosures:
TheStreet’s editorial policy prohibits staff editors, reporters, and analysts from holding positions in any individual stocks. Richard Saintvilus was long AAPL and held no position in any of the stocks mentioned.
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